Tuesday, February 05, 2013

Regarding the Recession Question

All of my forward indicators have now gone YoY negative. That would seem to indicate that we are in recession.When in doubt, I always consult freight:Water:Note that after May, we managed to rack up a perfect record of lagging 2010 & 2011. Rail - this is the first really comparable week YoY, accumulated. Total ton-miles down YoY 6.7%. Intermodal is up 4.7%. Retail figures are going to hurt intermodal, and will hurt China. Because retail is going to be slack. Stores really are shutting down. Trucking - the bright spot. But the bright spot is down YoY for December:

As a result, the SA index equaled 121.6 (2000=100) in December versus 118.3 in November. Despite the solid monthly increase, compared with December 2011, the SA index was off 2.3%, the worst year-over-year result since November 2009. For all of 2012, tonnage was up 2.3%. In 2011, the index increased 5.8%.

So are we left with the theory that tax increases will bring prosperity? What about diesel? So far this year it is down 5.5%, with somewhat colder weather which should be jacking up heating oil purchases. The four-week running total is -.6.3%. So I have rising consumer loan and mortgage delinquencies, freight declines YoY, and short term unemployment up about 9% YoY. Trucking doesn't look too hot either. Paper & metals don't look too hot. I kind of think auto sales have topped out - I don't think they'll do too much more this year. Maybe price increases will keep going, but I don't think production's going to do much. Well, now it is down to watching Other Deposits. We'll see what people are able to do with the prices, their after-tax incomes and their needs.

1. Health insurance is a killer. Up 18% YOY in my house. Friends rates went up over $100/month in California.

2. Just went to the mall to get my 3 year olds haircut. Tuesday special went from $10 to $12 as of 1/1/13. Noticed 2 new holes in the foodcourt and 2 more stores closed since Christmas.

3. Was notified at work that raises would average 1.5%. Two friends at other workplaces got nothing.

4. Noticed Diet Coke went up 5% in grocery store.

5. Friend in San Antonio said she knows not of what I speak when I talk about the economy. Eagle Ford shale is rocking South Texas. 18 wheelers outnumber the cars on the road. Said it was no Spindletop but wells were everywhere. Clients biggest issues are where to put $1,000,000 royalty checks so that they are insured.

6. Cattle herds are back to 1952 levels. Beef packing plants just closed south of Dallas as they can't get enough cattle to keep plant open.

7. Amazon is expanding big time in Dallas area. Opening up 3 warehouses in area.

8. Friend in Dallas area said private school tuition is going up 5% next year. Says he will have to cut the gardener or the maid or both.

9. Wife's work just wacked 2,000 jobs company wide. CEO says it is way worse in Europe than what they are saying in the news. They are now doing a complete justification for every company provided cell phone. Implemented new policy that will not reimburse any Wifi charges at ANY hotel.

10. The above examples just reek of uncontrolled growth and evidence of more tax increases are needed to provide some "balance".

I did not say that I say employment declines yet, just that the orders that should be coming in are not, and that the customer focus seems to be on figuring out how to keep their installed base going, instead of adding new features that the end consumer will want to pay extra for.

I think we are going to see continued retail shutdowns. The holidays weren't that good, and if they weren't making it, it's probably time to fold it up.

Health insurance is a big deal, but another hole in most people's pockets comes from property/casualty insurance, such as home and auto. Most people at least have those, and with the very low investment returns, those prices have to keep going up.

To claim a "recovery" based on unlimited Central State borrowing and spending and central bank manipulation of asset valuations is self-sustaining is beyond absurd. Aggregate demand (i.e. debt-based spending) supported by phantom collateral is not sustainable, no matter how many times Keynesian Cargo-Culters and Federal Reserve governors dance around their flickering little camp fire waving dead chickens.